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What is a ULIP?

Published On Mar 02, 2021, Updated On Apr 22, 2021

ULIP is referred as Unit linked Insurance Plan which offers investment opportunities complemented with the benefits of an insurance plan. It focuses on maximising your wealth while providing death benefits and maturity benefits. A ULIP basically takes a portion of your premium towards life insurance and the rest is invested in debt, equity and money markets. ULIPs are emerging to be a reliable investment solution among youngsters.  Following are some of the popular ULIPs with low premiums and more perks:

Top 5 ULIP Plans For Wealth Creation in India


Age of Entry

Minimum Premium

Free Fund Switches 

PNB Metlife Smart Platinum

7 to 70 years

INR 30,000


MAX Life Fast Track Growth Fund

3 months – 60 years

INR 25, 000 – INR 1 lakh


Bajaj allianz future gain

1 to 60 years

INR 25,000


HDFC Life Pro Growth Plus

14 to 65 years

INR 24,000 – INR1,00,000


SUD Life Dhan Suraksha Plus

8 – 50 years

INR 24,000


SBI Life Wealth Assure

8-60 years

INR 50,000


Also Read:- Do ULIPs Really Provide Good Returns?

Important ULIP Terms

Following is the list of basic terminologies of a ULIP which individuals should be aware of :

1. Sum Assured

Sum assured is known as the value guaranteed to the life assured in case of any withdrawal due to death or maturity.

2. Premium Payment Term

Premium payment term is the pattern of the frequency in which an individual pays the premium. It can be single pay(one time), regular pay(regular intervals) and limited pay(for a limited period of time).

3. Death Benefit

It is the estimated amount the nominee receives in case of the unfortunate demise of  the life assured. 

4. Maturity Benefit

Maturity benefit is the amount received by the life assured in case of the completion of the policy term. 

5. Surrender

Surrender is the situation in the policy where the life assured decides to terminate the policy before its completion. 

6. Fund Value

Fund value is the accumulated monetary value of the fund units present in the policy account of the investor. 

7. Partial Withdrawal

In ULIPs, the investor is offered an option where the fund value can be withdrawn at specified intervals to provide liquidity for meeting any financial requirement. 

8. Top- up Premium

The top-up premium is an additional perk in ULIP where you are allowed to park your surplus funds and reap benefits up to its full potential. 

9. ULIP Charges

ULIPs are bound to levy some charges namely policy administration charges, mortality charges, fund management charges and premium allocation charges etc on its investors 

10. Mortality Charge

This charge basically works as a compensation to the insurance company to cover the costs levied in case of the death of life assured. 

11. Discontinuance Charge

Discontinuance charge is only applicable if the life assured decides to cancel the policy before the date of maturity. 

12. Premium Allocation Charge

This charge covers for the allocation of the premium, it is generally high during initial years and gets reduced gradually from there. 

13. Fund Switching Charge

Usually the insurer provides multiple fund switching option free of cost, this charge is only applicable after those free switches. 

14. Fund Management Charge

These are levied to cover for the fund management service provided by the insurance company. 

You May Also Like To Read:- Difference between ULIPs and Life Insurance

What is Fund Switching in ULIPs?


ULIPs are a great instrument for investing money if you have an in-depth knowledge about the market. The benefits and the features of the ULIP like partial withdrawal, rider options, fund switch etc stands out among other types of insurances present. 

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